Author: 636Marx
The crypto friends around the author like to repost the US presidential prediction chart from ploymarket, which is the world's largest decentralized prediction platform where you can bet on various political, news, cultural and technological events. Of course, ploymarket is also the largest centralized platform in the world.
The rednecks are shouting "America first, Trump king!" But in fact, the Democratic Party is still leading in mail-in voting. Just look at Harris' prediction curve rising like a cobra, and you'll know this is not simple. November 5 (Beijing time November 6, 09:00) is the voting deadline for the 2024 US presidential election, which will determine whether it's the Republican Trump or the Democrat Harris. The author reviewed the political and economic propositions of the Democratic and Republican parties over the past half-century, and described in a panoramic way the changes that the falling US will bring to the global crypto market and Chinese crypto investors.
This article will cover the historical review of the Chinese crypto market, the independence and interconnectedness of global crypto finance, and the potential impact of Trump and Harris' policies on the Chinese market, to help Chinese crypto investors cope with possible market changes.
1. Historical review of the Chinese crypto market, can the Hong Kong experience foreshadow further relaxation of regulations in China?
China's attitude towards cryptocurrencies has undergone multiple adjustments. As early as 2013, the People's Bank of China and five other departments issued a "Notice on Preventing Bitcoin Risks", stating that Bitcoin does not have the legal status of currency. By 2017, a 94-ban was introduced by seven ministries, successively banning ICOs (Initial Coin Offerings) and the operation of virtual currency exchanges. However, with the rapid development of the global crypto currency market, China's policies have seen some subtle changes in recent years, especially in the Hong Kong region. (The author's previous article "Trends in the Chinese Crypto Currency Market Worth Watching in the Second Half of 2024" has detailed descriptions of this history.)
Hong Kong has played the role of a "test field" in the development of the crypto currency market. On the mainland, USDT cash-out is an illegal financial activity and is not protected by law. The author once had 3 bank cards associated with transfers frozen, and 2 bank cards of family members, and was frozen for more than 30,000 yuan by the Dongguan Hutmen Police Station. It was only after issuing various certificates through the Dongguan Letters and Visits that the freezing was finally lifted. But now OTC can apply for a Hong Kong bank account, trade USDT in a specific foreign currency area, and then exchange it to an overseas payment account for legal use in the mainland. The following image is a case of crypto OTC money laundering in Hengyang, Hunan, which I found in my friend's circle, the lawyer Pan. According to the description, the parties were detained and not allowed to meet due to the epidemic, making the case progress difficult.
The Hong Kong government is actively promoting a compliant virtual asset trading licensing system, and currently there are more than 90 crypto companies based in Hong Kong. Not only can crypto funds be set up, but there is also the only legal digital currency exchange in China, HashKey Exchange, which provides fiat currency deposits and withdrawals. HashKey Group chairman Xiao Feng was previously the deputy director of the Securities Management Office of the Shenzhen Branch of the People's Bank of China. Hong Kong has now become the most important crypto innovation center in China and even Asia. Sun Ge Justin, a big V, is usually more sensitive than a dog, and posted on social media in August that China has lifted the digital ban.
If Trump is elected, his running mate J.D. Vances is a staunch supporter of crypto, and Trump's own family has issued a crypto project called World Liberty Financial (WLFI). Trump publicly stated that "all Bitcoin should be minted in the US", and "Biden's hatred of Bitcoin will only help China, Russia and the radical communist left. We hope that all remaining Bitcoin should be 'Made in America'!! This will help us become an energy superpower!!"
Trump believes that Bitcoin is the last line of defense against China's central bank digital currency (DCEP), and his pro-crypto policy may prompt China to accelerate its exploration in this field. If Harris is elected, her emphasis on stability and risk control may affect China's assessment of Hong Kong's crypto policy, leading it to maintain a more cautious stance in the crypto market. Therefore, whether mainland China will accelerate the relaxation of regulations on the crypto market may depend on the type of opponent it faces.
2. The independence of the Chinese crypto market and the interconnectedness of global crypto finance: is there a disconnect?
China has implemented strict regulations on cryptocurrencies, but the demand for crypto investment in the Chinese market is still huge. Investors participate in the global market through overseas platforms or DeFi, which keeps the Chinese crypto market closely linked to the global crypto financial system.
The Chinese crypto market is also independent of the global crypto finance. During the September FOMC meeting, the correlation between Bitcoin's performance and US stocks exceeded 70%, and around the same period, the People's Bank of China announced a reserve requirement ratio cut and a 0.25% interest rate cut, releasing trillions of yuan into the market, causing the Shanghai Composite and Hang Seng to rise 4.5% and 3.2% respectively, but the BTC and ETH that Chinese investors are most concerned about did not show any linkage response.
Due to China's regulations, emerging cryptocurrencies such as BNB, SOL, Doge, etc. have a relatively different distribution in the Chinese market compared to BTC and ETH. Bitcoin's response to the People's Bank of China's reserve requirement ratio cut and interest rate cut is far lower than the Federal Reserve's, indicating a disconnect between the Chinese crypto market and global crypto finance.
The total market cap of Bitcoin globally is about $2 trillion, accounting for 3% of the total global stock market value. The author believes that, unlike the mature stock market, the crypto market's response to interest rate cuts and reserve requirement ratio cuts mainly depends on incremental funds and investors' expectations of market benefits, which then lead them to invest their remaining funds.
After Bitcoin broke through $70,000, ETF funds continued to double their inflows, but Bitcoin did not rise. It is believed that Bitcoin is already at a high level, or waiting for the US election results before participating, thus digesting the incremental funds flowing into the Bitcoin market. Compared to Western crypto ETFs, Hong Kong has taken some action, but the attitude is cautious, and it is a pity that the compilation of this data will be very cumbersome. The author believes that the bearish expectations in the Chinese crypto market have digested the incremental funds flowing into Bitcoin.
The US's open crypto policy direction, especially in terms of relaxing capital gains tax and other economic policies, has an amplifying effect on the volatility of global crypto finance. China, on the other hand, takes a cautious mainstream attitude towards global crypto finance, and China's policies are relatively more persistent than the US. The global crypto finance landscape will not be divided by these two superpowers, and crypto investment will evolve into a higher level of cognitive behavior.
3. Risk analysis: BTC price trend prediction and long-term investment recommendations after the election
Based on historical trends, the policy implementation and market expectation adjustments after the election will have an impact on BTC prices. Currently, the US government's public debt has reached $28.1 trillion, about 99% of GDP. The Congressional Budget Office predicts that if Trump is elected, the debt will rise to 166% of GDP by 2034; if Harris is elected, it will grow to 109%. This shows that regardless of who is in power, the US government will continue to expand its debt, which is an opportunity for BTC to re-enter the market.
Short-term Positive Expectations of Trump's Victory
If Trump wins, the market generally expects that he will promote a more relaxed policy environment. Against this backdrop, the BTC price will experience a short-term rebound after a period of volatility, but this rebound will not last for a long time. Based on historical experience, Trump will not be able to quickly implement specific policies.
Long-term Stability After Harris' Victory
If Harris wins, her regulation of crypto may become stricter, which may suppress the price growth of BTC and others. The crypto market may face pressure in the short term, as Harris demands the protection of the US dollar and market stability. BTC may enter a long-term downturn, suitable for finding low prices to build positions in batches.
Finally, if you are bullish on BTC, regardless of the election result, investing in mainstream coins such as BTC can still reduce the impact of price volatility through dollar-cost averaging. As long as the global economic environment remains unstable, holding quality crypto assets is still an effective way to increase value.
